Can a rally be sustained on happy headlines alone?
The SP500 has entered the upper resistance area. Can they keep making up stories and headlines to step this market higher? We will see.
The inch deep headlines look positive. It’s the data and background that is missing.
I’m intrigued though. I expect the smart money is loving the exit money moving in.
In case you are keeping score, nothing has been finalized but here’s what I see:
Trump’s no tax on social security — not in House tax bill
Trump’s no tax on tips — capped in House tax bill
Trump’s no tax on overtime — not in House tax bill
Trump’s lower drug price immediately — no longer immediately (Trump reversed Biden’s lower drug prices, so is this really cover for doing what big Pharm wants in the long run/)
Johnson’s “no Medicaid cuts” — $850 million in Medicaid cuts in House bill
Credits for purchasing own insurance — gone
2017 tax cut extension — of course in, and they expand cuts for wealthy
Carry trade loop hole cut — not in, still available
China tariffs — no agreement other than on how to agree. Trade barrier levels gone, now just high tariffs and higher future inflation
My overall assessment on tariffs and taxes is simple: Everything is designed to lower taxes on the filthy rich and push more taxes and less services on the rest of us. This has been the trend for 50 years.
Also, the okay CPI does not matter. Core Services PCE is still at 3.6% and it does not matter. Rates are not coming down until something breaks.
I discuss this with full access members.
Invest safe,
Michael Bond
Categories: TSP Charts